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How to differentiate altcoins from meme coins?

How to differentiate altcoins from meme coins?

Discover how memecoins, created for entertainment based on internet memes, contrast with altcoins, which serve as alternatives to Bitcoin with specific purposes.
3 minutes
15.05.2024
Editor Satoshi`s Secrets
How to differentiate altcoins from meme coins?

In Brief

Altcoins and memecoins are popular types of cryptocurrencies, with memecoins being created for entertainment purposes based on internet memes, while altcoins are alternatives to Bitcoin with specific purposes. Despite memecoins being a subset of altcoins, they differ in their creation technology, value, volatility, security, and community. Memecoins are known for their sharp price fluctuations based on meme popularity, while altcoins are valued for their utility, security, and long-term potential.

Altcoins and memecoins are two terms that appear in almost every cryptocurrency article. They denote popular types of crypto coins and are well known to every investor. However, newcomers to the crypto sphere may not immediately understand their essence or whether there are any differences between them. Let’s briefly clarify.

Memecoins and Altcoins: What are the Main Differences Between These Types of Cryptocoins?

What are Memecoins?

Memecoins are cryptocurrencies created based on popular internet memes or humorous characters. Memecoins are not intended for any specific purposes; they are created for entertainment and do not have significant intrinsic value. However, in recent years, their popularity has been steadily growing thanks to the universal love for memes.

The first memecoin was Dogecoin, released in 2013, named after the Doge meme with a surprised dog. Today, meme coins have become an integral part of the crypto world, with their market capitalization reaching billions of dollars. Some memecoins can be used for transactions on the internet, while others represent an entire ecosystem of protocols and form their own metaverses.

What are Altcoins?

Altcoins are all cryptocurrencies other than Bitcoin, as they are created as alternatives to it. The very first altcoin was Namecoin, released in 2011.

Key Differences Between Memecoins and Altcoins

Based on the above descriptions, it becomes clear that all memecoins are considered altcoins. At first glance, it might seem that they cannot have any differences, but in reality, there are quite a few nuances that an investor needs to consider to decide whether to buy memecoins or prefer other types of altcoins.

Purpose

  • Memecoins, as we’ve already explained, are mainly created for entertainment purposes. The success and popularity of a specific memecoin largely depend on the strength of its development team and the user community.
  • Altcoins are usually issued for a specific purpose, which increases their value.

Creation Technology

  • Memecoins are mainly created based on existing technologies like Bitcoin or Ethereum.
  • Altcoins are created on both old and new innovative technologies aimed at solving existing problems in the blockchain.

Value

  • Memecoins become popular due to their meme/humorous nature.
  • Traditional altcoins gain demand due to their utility, security, and long-term investment potential.

Volatility

  • Memecoins are characterized by frequent and sharp price fluctuations. This is because their value is determined by the popularity of a particular meme, rather than any fundamental indicators.
  • Altcoins are also volatile, but often slightly more stable.

Security

  • When creating many memecoins, insufficient attention is paid to security, making these cryptocurrencies sometimes a target for fraudulent manipulations, wallet hacks, or data leaks.
  • Traditional altcoins are usually much better protected.

Community

  • The community in crypto culture refers to communities of users supporting the development and use of a particular cryptocurrency.
  • Large communities usually form around popular memecoins – the larger the community, the more chances that the coin will remain successful for a longer time.
  • For altcoins, the community plays a less important but still significant role. Their communities are often more diverse in terms of participants, as altcoins can be used in various ways and therefore attract people for different reasons.

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